Whalebone v Andrews

[2016] NSWDC 149

District Court

New South Wales

Medium Neutral Citation:	Whalebone v Andrews [2016] NSWDC 149
Hearing dates:	2 July; 6 and 7 August; 11 November 2015; 5 and 8 February 2016
Date of orders:	30 June 2016
Decision date:	30 June 2016
Jurisdiction:	Civil
Before:	P Taylor SC DCJ
Decision:	(1)   Judgment for the plaintiff against the defendant in the sum of $117,274.50. (2)   Argument on costs to be reserved to a date to be fixed.
Catchwords:	CONTRACT – parties are brothers - terms of offer – whether there was acceptance – effect of counter-offer TORT – conversion - plant and stock
Legislation Cited:	Conveyancing Act 1919, s 127 Real Property Act 1900, s 51
Cases Cited:	Hyde v Wrench (1840) 3 Beav 334 RT & YE Falls Investments Pty Ltd v The State of New South Wales and Ors [2001] NSWSC 1027 Stevenson, Jaques & Co v McLean (1880) 5 QBD 346 Watson v Foxman (1995) 49 NSWLR 315
Category:	Principal judgment
Parties:	Roger Michael Whalebone (plaintiff) Derek Noel Andrews (defendant)
Representation:	Counsel: Mr B Quinn (plaintiff) Mr M Bennett (defendant)   Solicitors: Bamford Lawyers (plaintiff) Booth Brown Samuels & Olney (defendant)
File Number(s):	2012/115617
Publication restriction:	None

Judgment

Introduction

1. By November 2008 Roger Whalebone and Derek Andrews, who are brothers, owned 75% and 25% shares respectively of a property known as Rockey Hall, located at Bakers Swamp near Wellington, New South Wales. They also owned the associated plant equipment and stock in the same proportions. Their interests resulted from the provisions of the will of their father who died in 2007 leaving his estate to his four children in equal shares, and from the purchase by Mr Whalebone of the interests of the other two of his siblings, Christopher Whalebone and Jennifer Kelly. Probate was granted to Mr Andrews and Christopher Whalebone, the executors appointed under the will.

2. Mr Andrews commenced living at the property shortly before his father’s death. He has remained in sole occupation of the property since that time, conducting business at the property using the land, plant and equipment and stock, including by selling livestock. At no stage has he accounted to Mr Whalebone for Mr Whalebone’s interest in the sold livestock, or in any other respect.

Issues

3. In 2008 Mr Andrews was prepared to lease the property as tenant. Mr Whalebone says that he and Mr Andrews reached an agreement for Mr Andrews to rent the property and buy Mr Whalebone’s share of the stock and plant and equipment in accordance with a written offer by Mr Andrews. Mr Andrews denies that there was any valid acceptance. The existence of this agreement is the primary issue in the proceedings.

4. By the statement of claim Mr Whalebone also claimed his share of the value of the plant and livestock, although the basis of this claim was not apparent until he was given leave at the conclusion of the trial to plead the tort of conversion.

5. The circumstances of this case may give rise to other claims and remedies such as an account. But the parties agreed that those other claims and remedies are not part of this case, both because they are expressly not sought by Mr Whalebone, and because the necessary equitable remedies might not be available in this Court in any event.

The disputed contract

6. On 13 November 2008 Mr Andrews signed handwritten instructions to Messrs Quirk Baker Solicitors. In this and other quoted correspondence, the errors are in the original. The handwritten document stated:

“TO QUIRK BAKER

I INSTRUCT YOU TO LEASE ROGERS SHARE

1.	PROPERTY	$25410.00
2.	HOUSE	4590.00
$30,000.00

I OFFER TO PURCHASE THE PLANT AT VALUES AS AT DATE OF DEATH.

I AGREE TO HAVE BRUCE BRYANT & JAMIE JONES ASSESSING VALUE OF STOCK AND I AGREE TO BUY ROGERS SHARE OF STOCK AT THE MEAN OF THE TWO VALUES.

(signed) Derek Andrews

45/40/35 847acres

33880.00

40 per acre

land

25410.00 annually

4590.00

30,000.00

[Further apparently unconnected handwriting]”.

7. Victoria Baker of Quirk Baker Solicitors had previously been engaged, presumably by Mr Andrews, to act for the estate. By this document, Ms Baker appears to have been instructed by Mr Andrews personally.

8. Those written instructions led to a typed letter of the same date to Mr Whalebone in the following terms:

“Dear Roger

RE: PROPERTY “ROCKEY HALL” BAKERS SWAMP

We confirm Derek’s offer today as follows:

1. Derek offers to lease property including house for $30,000.00 per annum payable six monthly in advance.

2. Derek to pay Rural Lands Protection Board rates.

3. Owners to pay Shire Rates and Crown Lands rates.

4. Owners to pay insurance on house.

5. Tenant to pay public liability.

6. Derek to purchase Roger’s share of plant at $28,575.00 valuation enclosed.

7. Derek to purchase Roger’s share of livestock at the mean of the valuation of Bruce Bryant and Jamie Jones who attend “Rockey Hall” together.

Yours faithfully

QUIRK BAKER SOLICITORS

Per [signature of initials]

VICTORIA BAKER”.

9. In the statement of claim, Mr Whalebone claimed to have accepted this offer “orally and in writing…on or about 15.12.08”. This was denied by Mr Andrews. In evidence were two documents obtained from Ms Baker’s file. First, a copy of the typed letter of 13 November 2008 quoted above, with handwriting at the bottom stating: “OK to Accept 6th Dec 2008 signed Roger Whalebone”.

10. Secondly, there was a handwritten letter in the following terms:

“RMW FAMILY TRUST

6^TH December 2008

Quirk Baker Solicitors & Derek Noel Andrews Whalebone

25 Nanima Crescent

Wellington NSW 2820

Att Victoria & Derek

We hereby Accept Dereks offer to Lease our House & Property as Per signed contract – Agreement signed by Derek Andrews on

13-11-08	Property	25410.00
Copies Enclosed	House	4590.00
TOTAL 2 Page Contract	30,000.00

Could You Please Deposit ALL Monies Into our Nominated NAB Account As Per Rental Agreement Re Document Department of Fair Trading dated 23/4/2008

Your Letter Dated 13th Nov 2008

ALL Copies Enclosed For Your Records

Signed Roger Whalebone	Signed Han Ying Whalebone
6th Dec 2008	6-12-08”.

11. The so-called “Rental Agreement Re Document Department of Fair Trading dated 23/4/2008” was a document headed “Application for Registration of a Business Name” for the proposed “Rockey Hall Partnership” involving Mr Whalebone and Mr Andrews. Mr Andrews disputed any connection with the document and alleged a forgery in respect of his signature on the document, a matter considered below. Mr Whalebone signed the document on 23 April 2008, some eight days later than the date of Mr Andrews’ purported signature. Further, details may have been added in the period between the signatures. In some parts of his evidence Mr Whalebone relied on the document as evidencing the contract the subject of the primary issue.

12. The “Rental Agreement” is of limited assistance in identifying the existence or terms of any agreement in late 2008. The contents of the document, with its reference to Mr Whalebone and Mr Andrews as applicants together carrying out the “Rockey Hall Partnership” suggest that, as at April 2008, the brothers were going into business together, a conclusion supported by Mr Andrews’ affidavit and by handwritten notes by Mr Whalebone. But the brothers appear to have realised that they could not work together and the alternative proposal by Mr Andrews was then offered in November 2008. The Rental Agreement does, somewhat curiously, refer to both a farming business and to a “rental and purchase agreement” – the latter more closely describing the asserted agreement in this case.

13. Returning to the two letters dated 6 December 2008, they were agreed to have been found in Ms Baker’s file so I must infer that she received them. There is no evidence that either document was received by Mr Andrews. Acceptance of an offer must be communicated to the offeror but acceptance by receipt by Ms Baker of those 6 December 2008 documents could be sufficient if Ms Baker was Mr Andrews’ agent. Alternatively, Ms Baker may have communicated the acceptance to Mr Andrews.

14. Other matters are relevant. There are two versions of a letter dated 27 November 2008 in evidence. The first was claimed by Mr Andrews to have been received from Ms Baker. It was initialled by her and was in the following terms:

“27 November 2008

Mr Derek Andrews

“Rockey Hall”

BAKERS SWAMP NSW 2820

Dear Derek

RE: ROGER WHALEBONE

We confirm instructions and reduced to writing in the memorandum to Roger dated 13 November 2008 and a copy of which is enclosed.

Roger has advised that he will lease his share of the property for $40,000.00 per annum payable six monthly in advance.

Roger agrees with items 2, 3, 4, 5, and 7. Roger agrees as to the plant with the exception of 1929 model Chev truck and Dodge utility. In respect of these items Roger wishes to purchase your share for the valuation of Plasto dated 17 July 2007.

Kindly consider and let us have your instructions.

Yours faithfully

QUIRK BAKER SOLICITORS

Per: [signature initials]

VICTORIA BAKER”.

15. The second version was identical in the wording but did not contain her signature or initials and the number “30” was handwritten partly over and partly above the number “40” where the letter referred to “$40,000.00”, indicating that at some stage there was a change to the document. This version was found in Ms Baker’s file.

16. The repeated reference to Mr Andrews’ “instructions” and Mr Whalebone having “advised” her, may provide further support for a conclusion that Ms Baker was acting as solicitor for Mr Andrews. These letters raise an issue about whether Mr Whalebone made a counter offer rejecting the original offer of 13 November 2008.

17. Other documents of relevance include a note of Mr Whalebone dated 4 October 2008, not objected to or challenged by Mr Andrews, which records Mr Andrews’ words, as follows:

“Derek once again offers to rent our share of the farm & purchase our share of plant & equipment + buy our livestock. Derek said “Roger I will visit my solicitor Victoria Baker & organise the payment for you I want to be a sole trader, I do not want to go into business with you, Roger we don’t get along at all.”

18. Further, a handwritten letter to Mr Andrews dated 16 December 2008 was in the following terms:

“RMW FAMILY TRUST 16th Dec 2008

Derek Noel Andrews WHALEBONE

Rocky Hall Bakers Swamp Wellington NSW

Derek – Received Your Letter From Your solicitors Quirk Baker, Letter dated 13-11-08 in reference regarding you RENTAL Lease OFFer For … 75% ownership of OUR FARM & Assets your OFFER AS her agreement with your solicitor Victoria Baker representing you For your contract and agreement obligations ownership of the FARM share $30,000.00 We accept Your offer to Lease our 75% ownership of the FARM “Rockey HALL” Bakers Swamp Wellington NSW and to purchase our share of ALL Plant and equipment as per Plasto & Co Valuation $28,575.00 along with the Purchase of ALL Live Stock as per letter 13-11/08 Copy Enclosed.

As Brothers Derek it is impossible for us to go into business together as discussed on many many occasions. We both agree that a farm business together is totally impossible [you] are welcome to stay on the farm as long as you like and we look forward to receiving your cheque immediately namely $58,575.00 and payment for live stock within 30 days/500…

Agreement written verbally ph call etc

Regards

Roger Whalebone Witnessed by [signature]”.

19. Mr Andrews denies receiving this correspondence. No payments were made by Mr Andrews.

20. In mid-2009 Mr Whalebone, directly and via his solicitor, was complaining about an absence of payment.

21. Apart from Mr Andrews having paid the statutory charges on the land, neither Mr Andrews nor Mr Whalebone have made any payment in accordance with the terms of the 13 November 2008 letter.

The plaintiff’s evidence

22. Mr Whalebone swore two affidavits. There was no evidence (in an admissible form) about acceptance in either. Leave was granted for Mr Whalebone to give further evidence in chief orally, and the following exchange occurred:

“Q. You told the Court, in evidence, that on 13 November you received a letter with an offer in it?

…

Q. In relation to that offer, did you do something?

A. Yes.

Q. Who did you contact?

A. Victoria Baker Bourke at Wellington, and also my brother, Derek.

Q. When you contacted your brother, how did you do that?

A. We drove to the farm and visited him, particularly after the second time when probate was granted, and we made also many phone calls. We always rang, communicated.

Q. In relation to those phone calls, when were they made?

A. During the same period of time, all through 2008, November, December.

Q. In relation to the offer, did you say something to your brother about the offer?

A. Yes.

Q. What did you say to him?

A. We will accept the $30,000. We originally wanted $40,000. In reference to Mr Paul Cudden at the rear of the property, on the eastern side boundary, had offered $40,000 per annum to rent the property, my 75% share. And because my brother Derek wanted to stay on the farm, we accepted his offer of $30,000, along with the purchase of all our livestock, plant and equipment, motor vehicles, and a number of antique belongings.

Q. That acceptance was made over the phone?

A. Yes.

Q. That was around what date, do you remember?

A. Around the first, there was a written agreement done in April 2008.”

23. Mr Whalebone’s wife, Han Ying Whalebone, also swore an affidavit largely in identical terms to Mr Whalebone’s affidavits and was cross-examined. She gave no evidence about the telephone conversation on 15 December 2008.

24. Mr Andrews denied any such conversation.

Credit of Mr Whalebone

25. Mr Whalebone’s evidence of this conversation of November or December 2008 was challenged on a number of bases.

26. First, Mr Whalebone pleaded that “The Offer was accepted orally and in writing by the Plaintiff on or about 15.12.08”. Mr Andrews submitted that there was no evidence of the written acceptance. However, the documents in Ms Baker’s file, quoted earlier, regarding the offer dated 13 November 2008 evidence at least a purported written acceptance by letters dated 6 and 16 December 2008.

27. Secondly, Mr Andrews submitted that correspondence from Mr Whalebone’s solicitor, John Dowling, in 2009 does not provide unequivocal support for the existence of acceptance of the 13 November 2008 offer. On 5 June 2009 Mr Dowling wrote to Mr Andrews as Mr Whalebone’s solicitor in the following terms:

“Dear Sir

RE: FORMAL DEMAND

PROPERY “ROCKEY HALL” AND CATTLE AND STOCK AND EQUIPMENT THEREON

I act for Roger Whalebone. I note that he is a tenant in common as to a 3/4th share in the property and improvements and the cattle and equipment ("the property") situated thereon.

I have been instructed that:

1. You do not wish to be bought out of your 1/4^th interest in the property.

2. Without lawful authority you have sold off approximately 48 head of cattle without reference to Mr Whalebone.

3. You have failed to account to Mr Whalebone for the sales.

4. You deny lawful access to my client to the property.

5. You have failed to honour an agreement to pay rent for the property to Mr Whalebone.

Unless these matters are resolved forthwith and no later than the 19th June 2009 I am instructed to forthwith apply to the Supreme Court for orders that either the property be sold or that you be bought out and that you account for sales and other disposals of assets. An order will also be sought seeking the appointment of a Court Appointed Receiver to the property to preserve the assets pending finalization of the Court proceedings. Legal costs will also be claimed together with interest

It is respectfully suggested that you obtain legal advice concerning these matters.

[signature]

Yours faithfully,

John Dowling

Solicitor”.

28. This letter refers to an “agreement to pay rent”, a component of the disputed agreement. However, it also focuses on matters other than the monies which would be owed had the 13 November 2008 offer been accepted and become an agreement, and there is no reference to monies owed for stock or for plant, other than an assertion that Mr Whalebone retained a three-quarter interest in the cattle and equipment and that Mr Andrews had failed to account for the sales.

29. Mr Dowling spoke to Mr Andrews by telephone on a without prejudice basis. Then on 23 June 2009 Mr Dowling wrote again, providing a copy of the 13 November 2008 offer and asserted that it “was accepted orally by my client”. Mr Andrews retained a solicitor who on 6 July 2009 responded to Mr Dowling asserting that “no agreement has been reached between our clients” and referred to a Deed of Family Arrangement, a document not in evidence.

30. Mr Dowling responded to Mr Andrews’ solicitor on 10 July 2009, providing a copy of the letter of 13 November 2008, asserting an acceptance by Mr Whalebone directly to Mr Andrews, referring to an “alarming” claim by Mr Andrews of “outright ownership of the stock as declared to the selling agent as set out in their letter dated 9th July 2009” and put forward a proposal.

31. Mr Dowling’s letter of 23 June 2009 asserts an agreement and is broadly consistent with Mr Whalebone’s claim. Although the reference to the cattle and equipment in the earlier letter dated 5 June 2009 differs from the asserted agreement, the three letters (5 June 2009, 23 June 2009 and 10 July 2009) are each broadly or specifically supportive of Mr Whalebone’s claim of a rental agreement.

32. Thirdly, Mr Andrews submitted that the plaintiff was guilty of “outright forgery” of the defendant’s signature in the April 2008 document. This allegation is not supported by an expert or other evidence but is dependent on Mr Andrews’ evidence that he had “never seen the document” and that “[a]lthough my purported signature…somewhat resembles my signature, I never signed or dated the document”. The basis for the allegation of forgery was weakened by Mr Andrews’ oral evidence. When asked about this signature he stated, “That appears to be my signature” and subsequently, “I don’t recall signing the document at all”. Mr Andrews did not press in closing submissions an allegation of forgery. In light of his oral evidence and the similarity of the disputed signature with Mr Andrews’ signature in his affidavit, I find on the balance of probabilities that the signature was a genuine signature of Mr Andrews. Thus, the submission of forgery is without foundation.

33. Fourthly, Mr Whalebone claimed to have a diary in which he made important notations such as “contractual agreements and arrangements and promises”. The diary was called for. Mr Whalebone’s counsel said he would be able to produce it, “but I need a bit of time” as it “would be in storage”. Although the matter was adjourned for some weeks, and the document not produced at the time of recommencement, the call for the diary was not repeated after the adjournment. In those circumstances, I do not think the absence of the diary should be accorded great importance. On the other hand, its absence precludes there being other contemporaneous support for acceptance. Whether the reference to a diary included the handwritten notes in evidence was never clarified.

34. Fifthly, Mr Andrews criticised the manner in which the plaintiff gave answers. However, Mr Whalebone did not appear to be a highly educated man and I did not regard the form of his answers as indicating any dishonesty. It might be surprising if the purity of his recollection of conversations remained unaffected by the passage of time and the circumstance that he had not been paid any amount for seven years by his brother for the exclusive use of substantial property, stock, plant and equipment largely owned by Mr Whalebone.

35. Finally, Mr Whalebone’s affidavit evidence and his case generally were not prepared with care by him or those he instructed. Crucial correspondence was tendered only after the initial trial had concluded, and his evidence, when initially given, had little documentary material to support it. None of these matters impact on Mr Whalebone’s honesty. I accept him to be an honest witness, even if his recollections were not always clear or reliable.

Credit of Mr Andrews

36. I have mentioned already Mr Andrews’ false assertion of forgery of his signature by Mr Whalebone. That is not a matter that bolsters Mr Andrews’ credit. Serious unfounded allegations may indicate the witness to be unreliable and to be inclined to prefer his interest to his recollection. The damage to Mr Andrews’ credit may be mitigated to some extent by the circumstance that the document is not of crucial relevance, and the form of the document indicates that some additional details may have been inserted after Mr Andrews signed it.

37. Mr Andrews, in his affidavit, denied receiving any of the correspondence from Mr Dowling in June 2009, including that he had never received the letter dated 23 June 2009 from Mr Dowling. However, in oral evidence Mr Andrews accepted that he did receive that letter, attributing his error to having “completely forgotten all about it until just recently” and that his memory of communications with Mr Dowling “is a bit vague”. He also implicitly acknowledged receipt of the letter in his defence. Also, Mr Andrews must have received the earlier letter dated 5 June 2009, because he handed it to his solicitors and gave them instructions to respond to it.

38. I cannot ignore that Mr Andrews’ evidence indicates an inaccurate and biased view about his conduct. He retained and used for his own purposes plant and equipment valued at $28,575, which he knew to be 75% owned by his brother at a time when both knew of the need for a formal agreement to resolve their differences. Similarly, he dealt with stock valued at almost $100,000, which were 75% owned by his brother. Although through his solicitors he conveyed that he was “prepared to account to [Mr Whalebone] for income and expenditure since the commencement of the enterprise on 1 October 2008”, he never has. His justification for not accounting to the plaintiff for sales of livestock was that Mr Whalebone had not contributed to the rates: “I formed the view that the Plaintiff would not contribute any funds for the operation of the Property or the livestock and [therefore I] have not accounted for any sale proceeds of the livestock since November 2008.” Apparently debiting Mr Whalebone’s proportion of any costs against Mr Whalebone’s undoubted entitlement to a share of the proceeds of the sale of the cattle did not find favour with Mr Andrews.

39. Further, Mr Andrews’ affidavit evidence recounts his expenditure on the farming operation for the purposes of claiming a credit against any money owed. But at no stage did he disclose any details of the income he received from the farm. Expenses may be relevant in an action for an account of the farm income, but they are not relevant to rent owed under a rental agreement, and without details of revenue received cannot excuse a conversion. Mr Andrews was not commercially naive. In my view, his failure to reveal farm revenue precludes the expenses constituting a credit against Mr Whalebone’s claim, and also does not assist his credit.

40. Mr Andrews also claims as a set off that he is entitled to about $40,000 per year for looking after the property since 2008, if he is liable under the rental agreement. If such a rental agreement exists, there is no scope for any countervailing claim for a wage for caretaking a property he has rented. The claim is so lacking in merit as to also impact adversely on his credit.

Conclusion

41. I do not regard the recollection of Mr Andrews as at all reliable. Although I prefer the evidence of Mr Whalebone, his recollection is also not without problems.

42. I do not accept Mr Andrews’ denials of any communications with Mr Whalebone or discussions with him about the offer. The evidence contains Mr Whalebone’s notes of these conversations. But the notes do not purport to be a verbatim record of the conversations and recollections of oral conversations now seven years old are not likely to be at all accurate. The effect of oral conversations can turn on one word, one phrase, even potentially one pause or accent: see Watson v Foxman (1995) 49 NSWLR 315 at 318-319. In these circumstances, reliance is best placed on the surrounding circumstances and contemporaneous written communications.

43. The communications must be assessed against a background principle that it is rare for substantial commercial transactions to be concluded by conversations or informal documents, without the presence of a formal executed contract: see RT & YE Falls Investments Pty Ltd v The State of New South Wales and Ors [2001] NSWSC 1027 at [56]-[58] and the authorities there mentioned. In that case, Palmer J stated at [57]:

“Allegations that such informal contracts have come into existence upon the basis of conversations – invariably disputed – are generally found to be the last refuge of the desperate.”

On the other hand, the parties to this purported transaction are brothers, and that might be expected to result in a greater degree of informality.

44. Despite all the difficulties with Mr Whalebone’s evidence I am persuaded that in December 2008 he did orally communicate to Mr Andrews and to Ms Baker his willingness to accept the terms of Mr Andrews’ 13 November 2008 offer. His written notes and his correspondence confirm this willingness and communication. But two problems with finding a contract remain.

45. First, the agreement for lease is not registered or in registrable form so at common law it could only be for a period of not more than three years, pursuant to s 51(3) of the Real Property Act 1900. In any event, no term is specified in any conversation or document in evidence. Mr Whalebone urged the Court to find a three-year lease, but there is no basis to find that term.

46. Section 127(1) of the Conveyancing Act 1919 provides that:

127 Tenancy from year to year not to be implied

(1) No tenancy from year to year shall, after the commencement of this Act, be implied by payment of rent; if there is a tenancy, and no agreement as to its duration, then such tenancy shall be deemed to be a tenancy determinable at the will of either of the parties by one month’s notice in writing expiring at any time.

…”

47. If an annual tenancy is not implied by payment, nor can it be implied merely by a promise to pay. Thus, if there is a tenancy, and no agreement as to its duration, I must find it a tenancy determinable at will on a month’s notice. And Mr Andrews’ solicitor’s letter of July 2009 denying an agreement is sufficient notice of termination.

48. However, the absence of any evidence of a term and a start date does more than merely confine the tenancy to a tenancy at will. These omissions, together with the absence of any payment of rent, indicate that the parties had not finally agreed on all of the necessary terms.

49. The second problem is that the evidence indicates that Mr Whalebone proposed an alternative deal to Ms Baker in late November 2008. Leaving aside whether the rent would be $30,000 or $40,000, a clear counter offer, the expressed desire of Mr Whalebone to purchase Mr Andrews’ interest in two trucks which Mr Andrews had offered to buy is, without more, an indication of a counter offer. And if it is a counter offer, it is a rejection of Mr Andrews’ offer of 13 November 2008. There was then no offer available to accept: see Hyde v Wrench (1840) 3 Beav 334.

50. Mr Whalebone submitted that the letter of 27 November 2008 indicated no more than a request for information, similar to Stevenson, Jaques & Co v McLean (1880) 5 QBD 346. This submission underlines the importance of what Mr Whalebone said to Ms Baker that prompted the 27 November 2008 letter. Mr Whalebone’s evidence about this is unclear, and Ms Baker, for reasons which elude me, was not subpoenaed or called by either party even though she was apparently available.

51. The uncertainty about whether Mr Whalebone’s intention was that the rent be $40,000, or agreed at $30,000, compounds this problem. Although Mr Whalebone submitted that he “hotly denies” such a counter offer, his affidavit, after referring to the 13 November 2008 offer, states: “I originally wanted $40,000 per year but Derek refused to agree to this amount, Derek Andrews would not pay this amount” and referred to the 27 November 2008 letter in this context. His chronology, although containing other errors, states “Plaintiff originally wanted $40,000 (letter 27 November 2008)”.

52. If the letter of 27 November 2008, or the events leading to it, were a counter offer, then Mr Whalebone’s purported acceptance of the 13 November 2008 offer becomes a further offer. There is no evidence of any acceptance by Mr Andrews of this offer by Mr Whalebone.

53. Bearing all these matters in mind, I am not persuaded that an agreement in the terms asserted was reached. I accept that Mr Whalebone believed that an agreement had been reached. Mr Andrews may even have suspected Mr Whalebone’s belief. But no estoppel was alleged and the subjective intentions of the parties are not enough. In my view, although the parties recognised that the partnership business evidenced by the 23 April 2008 document could not continue, the proposal of a purchase (of the stock and machinery) and rental (of the property) arrangement was never finalised. The absence of any unequivocal conduct by the parties pursuant to the terms of the 13 November 2008 letter supports this conclusion.

The claim for conversion

(a) Plant and the use of the farm

54. Mr Whalebone did not identify any case where a co-owner by mere use of personalty or realty had committed the tort of conversion. That was not his case. He complained of being excluded from the farm by Mr Andrews, and that thereby Mr Andrews had converted the machinery.

55. But mere exclusion from the farm says nothing about the use of machinery. Nor is there evidence that Mr Whalebone wished, or expressed a wish, to use the machinery, on the farm or elsewhere. I do not find that Mr Andrews has converted the plant.

56. Mr Whalebone’s claim in respect of Mr Andrews’ use of the farm was confined to his claim in contract, which I have dismissed.

(b) Stock

57. Mr Andrews sold stock and did not account for any of the proceeds to Mr Whalebone. His defence to conversion is that substantial damages could not be awarded because Mr Whalebone has not proved how many of the cattle were sold.

58. Mr Andrews submitted that a valuation dated July 2007 was agreed to by the parties to indicate the amount and value of the stock in late 2008, subject to any sales during the administration of the estate. Mr Whalebone disputed the rider. Mr Andrews’ affidavit disputes the currency of the valuation. However, Mr Andrews possessed knowledge about all stock sales but declined to give that evidence. He was not cross-examined about his silence. Mr Whalebone, of course, could not know when and at what price cattle were sold.

59. The valuation in 2007 valued the 185 head of cattle at $99,500. There was evidence of 180 head of cattle in 2009. Mr Whalebone gave evidence that the cattle numbers hardly altered while Mr Andrews indicated that numbers “fluctuated because of natural causes – births and deaths – and also sales”. Mr Andrews gave no evidence of the extent of natural losses nor any thefts or other reasons for reduced numbers. Sales of cattle after the administration of the estate would not reduce Mr Whalebone’s entitlement.

60. Because of my limited preference for Mr Whalebone as a witness and because I should not infer a matter in favour of Mr Andrews – a lower number of cattle – when he could have given evidence about that matter but declined to do so, I would infer that from the completion of administration until mid-2009 the number of stock was approximately 185, and had a value approximately indicated by the valuation in evidence. Mr Whalebone had a 75% interest in those cattle, and was entitled to 75% of the proceeds of any sale.

61. Accordingly, I find that Mr Andrews has converted the stock sales income to his own use, and must account to Mr Whalebone for 75% of that amount. The best estimate of that amount is the value of the cattle, namely $74,625 (75% x $99,500). Although it may be that not all of the stock was sold by 1 January 2009, by that stage Mr Andrews was treating them all as his own, selling some and retaining the proceeds, retaining others and keeping or selling their progeny.

62. A fair measure of damages for converting the stock proceeds is, in my view, $74,625 plus interest from 1 January 2009, which at the statutory court rates amounts to $42,649.50.

63. Accordingly, I propose to give judgment in favour of Mr Whalebone in the sum of $117,274.50 ($74,625 + $42,649.50). I will hear the parties as to costs.

Orders

64. The orders of the Court are:

1. Judgment for the plaintiff against the defendant in the sum of $117,274.50.

2. Argument on costs to be reserved to a date to be fixed.

**********

Decision last updated: 28 July 2016